The Australian Government's overseas aid program aims to advance the national interest by assisting developing countries to reduce poverty and achieve sustainable development. Australian aid provides practical, well-targeted development assistance to the Asia-Pacific region and responds selectively to needs in South Asia, Africa and the Middle East. The aid program also responds to international emergency and humanitarian crises.

Within the Asia-Pacific region, many countries are facing significant challenges to their stability and security. Conflict and instability impact directly on countries' development prospects. The aid program provides a 'peace dividend' to encourage the cessation of hostilities and the start of constructive development. The aid program is an integral part of Australia's engagement with the Asia-Pacific region and a practical demonstration of a commitment to helping build regional stability and prosperity.

In 2003-04 the Australian Government provided $1.9b as Official Development Assistance (ODA). Table 3.3 provides details of the ODA programs for 2004-05 totalling slightly more than $2.1b, an increase of $240m on the amount for 2003-04. The ratio of ODA to Australia's gross domestic product for 2003-04 is estimated at 0.26%, placing Australia above the donor average which, in the latest year available (2003), was 0.25%.

Further information and publications on the Australian Government's aid program can be obtained from the web site of the Australian Agency for International Development, <http://www.ausaid.gov.au>.

The Australian Agency for International Development (AusAID)

AusAID manages Australia’s overseas aid program on behalf of the Australian Government. The aid program's objective is to advance Australia's national interest by assisting developing countries to reduce poverty and achieve sustainable development.

Key themes of the aid program

Five guiding themes shape Australia's efforts to assist developing countries to reduce poverty and achieve sustainable development. These themes provide a lens through which Australia's development cooperation is programmed and implemented:

Governance - promoting democratic and accountable government and effective administration.

Globalisation - assisting developing countries to access and maximise the benefits from trade and new information technologies.

Human Capital - improving basic services to support stability and government legitimacy.

Sustainable Resource Management - promoting sustainable approaches to the management of the environment and the use of scarce resources.

Country and regional strategies are developed in consultation with partner governments, and are the primary means through which the guiding themes are translated into programs on the ground. Strategies take account of partner government priorities, Australia’s strengths, and the activities of other donors.

3.3 AUSTRALIAN OFFICIAL DEVELOPMENT ASSISTANCE - 2004-05(a)

$m

Papua New Guinea and Pacific

Papua New Guinea

435.6

Solomon Islands

201.6

Vanuatu

30.9

Fiji

25.1

Samoa

18.4

Tonga

12.0

Kiribati

11.9

Tuvalu

4.3

Regional Pacific

65.4

Total

805.2

Nauru Additional(b)

13.5

East Asia

Indonesia

160.8

Vietnam

73.7

Philippines

62.2

China

49.3

Cambodia

41.4

East Timor

39.9

Laos

18.4

Thailand

10.6

Regional East Asia

37.1

Total

493.4

South Asia, Africa and Other

Bangladesh

28.7

India

17.2

Sri Lanka

23.0

Regional South Asia

17.6

Africa

67.5

Middle East and Central Asia

52.9

Total

206.7

Other Government Departments (OGD)(c)

168.5

Core contributions to multilateral organisations, other ODA(d)

450.8

Reconciliation of expenses to cash(e)

-5.1

Total ODA (cash)

2,133.1

(a) Budget estimates for 2004-05.(b) Represents additional funding appropriated through new budget measures agreed by the Australian Government.(c) OGD includes ODA eligible expenditure by government departments which has not been allocated to a particular country or region.(d) Includes core contributions and cash payments to mulitlaterals that cannot be attributed to a particular country.(e) Includes accrual adjustments for non-ODA eligible (administered and departmental) expenditure.

Source: AusAID.

Country programs

Papua New Guinea (PNG)

PNG is the largest recipient of Australian aid. Australia will provide an estimated $435.6m in total ODA to PNG in 2004-05.

Economic growth is fundamental to addressing PNG's development challenges and helping PNG to achieve poverty reduction. This must be accompanied by effective service delivery that enables a healthy, educated population to access economic opportunities. At present the aid program provides most of the funding for basic services such as health and education in many rural areas.

Australia is working closely with PNG to build a secure and prosperous nation and thereby reduce the incidence and severity of poverty throughout the country. To achieve this, a new approach to assistance has been developed with a greater focus on the core constraints to growth and an emphasis on PNG's performance in managing its own resources. It involves the engagement of a wide range of Australian agencies and institutions building durable institutional linkages with their PNG counterparts.

In 2004-05 the aid program will support broad-based sustainable economic growth and poverty reduction in PNG by working through PNG government agencies and systems to ensure a better use of PNG’s own resources to strengthen economic management, deliver essential services, and improve law and order. Australia will assist PNG to protect the vulnerable and create the preconditions for growth to occur through the provision of health and education services, an effective and robust law and justice system and serviceable transport infrastructure; create an environment conducive to private sector growth; and support democratic change through promoting debate on PNG’s development choices, building the capacity of non-government agencies and regulatory frameworks, and supporting a free and fair electoral system.

The Pacific region

The Pacific region includes some of the world’s smallest economies. These nations are diverse but face similar development challenges including isolation, limited resources, rapidly growing populations, increasing urbanisation and environmental vulnerability. They are prone to natural disasters and other causes of environmental degradation, and in most cases rely heavily on foreign aid. Much of the existing infrastructure needs to be renewed. In many parts of the Pacific, population growth is outstripping the capacities of health and education systems to provide adequate services.

Australia's participation in the Regional Assistance Mission to Solomon Islands (RAMSI) involved the implementation of a new package of strengthened assistance to Solomon Islands, focused on budget stablisation and support to the law and justice sectors, promoting good economic governance and reform efforts, and strengthening the machinery of government.

RAMSI includes a large development assistance component ($52.7m in 2003-04). Around 80 RAMSI personnel are working within various Solomon Islands government agencies as advisers or occupying in-line positions - particularly in the finance and justice sectors - to stabilise core government functions and build the capacity of the Solomon Islands public service.

The quality of governance has a decisive influence on development, particularly in small states with limited economies of scale and few opportunities for diversification. The new Pacific Governance Support Program will provide an additional $6m in 2004-05 to fund activities that enhance good governance and institutional capacity by transferring public sector expertise between Australia and the Pacific. This will involve greater utilisation of the capabilities and significant expertise of Australian Government departments and agencies (a whole of government approach).

The Pacific Islands Forum at its 2004 meeting initiated the increased pooling of regional resources, building on the collaborative approach that Pacific states have developed over recent decades. Forum leaders agreed at the meeting to the principles and recommendations of the Australian funded Pacific Regional Transport Study, promoting the efficiency and effectiveness of regular, reliable and competitive air and shipping services for Forum countries. In addition, Australia has agreed to provide $2m towards the Transport and Technical Assistance Fund to support implementation of these principles. Australia will also work with national police forces on a regional basis through the implementation of the Pacific Regional Policing Initiative.

Australia is committed to long-term strategies to assist Pacific Island Countries (PICs) with their national development efforts.

Australia has bilateral aid programs with all PICs. In addition, Australia supports the well-developed framework of regional organisations and institutions that exist in the Pacific.

East Asia

Australia has bilateral programs with Indonesia, East Timor, Vietnam, the Philippines, Cambodia, Laos and China. In addition, a substantial regional program is focused on supporting economic integration in the region and addressing transboundary development challenges such as transnational crime and reducing the spread of communicable disease. Australia’s assistance to Burma is concentrated on vulnerable populations and delivered through local and international non-government organisations and UN agencies. Development cooperation to Thailand has been reduced significantly as it graduates from being an ODA recipient. Australia provides Development Scholarships for specialised expertise and qualifications to Mongolia, and humanitarian assistance to DPRK

Australian development cooperation to Indonesia is Australia’s second largest. Australia’s objectives in 2004-05 remain focused on working with Indonesia to improve economic management; strengthen the institutions and practices of democracy; enhance security and stability; and increase the accessibility and quality of basic services.

In East Timor, one of the poorest countries in the region, Australia will support the delivery of essential services including assistance for an effective police force and strengthening the legal and judicial system. Other assistance will be directed towards agricultural production, health, rural water supply and sanitation.

Australian assistance to Vietnam aims to tackle the barriers to broad based growth by strengthening the governance of institutions required for a competitive market economy. It also seeks to improve productivity and links to markets for the rural poor in the Mekong Delta and Central Coast region.

In the Philippines assistance is focused on economic governance, security and stability and rural living standards.

In Cambodia the aid program focus is on increasing productivity and incomes of the rural poor, strengthening the rule of law and reducing the vulnerability of the poor.

The program to Laos focuses on establishing the pre-conditions for sustainable development including access to education, property rights in the transition to a market economy and reducing the vulnerability of poorer communities to natural disasters.

In China the key development challenge is to promote equitable growth, taking into account the widening disparities between urban and rural incomes, the development needs of Western and North-Eastern China, and the massive movement of people from rural areas to the cities.

South Asia

Australian assistance is provided in Sri Lanka, Bangladesh, India, Pakistan, Nepal, Maldives and Bhutan. The assistance to the region will continue to move to more flexible and less resource intensive mechanisms such as via multilateral organisations and the Australian Development Scholarships program.

Australian assistance is improving the delivery of basic services, especially primary education, while strengthening governance and reform in South Asian countries. The program also has a regional focus and has provided support in such areas as vital research into arsenic contamination of water and food and the development of strategies for arsenic mitigation and safe water management. Other regional activities include training and research in HIV/AIDs prevention and care and trade facilitation.

Africa and the Middle East

The international community has focused substantial resources on assisting Africa to achieve economic growth and reduce poverty. Australia is a small donor to Africa and Australian assistance is, therefore, very targeted. Areas of focus include food security, addressing communicable diseases, particularly the HIV/AIDS epidemic and improving governance. Australian assistance is increasingly channelled through international organisations and non-government organisations (NGOs) with well-established expertise in Africa.

The Middle East remains a priority for Australia’s efforts in responding to humanitarian needs and the rebuilding of society and livelihoods. Australia’s aid program is making a significant and effective contribution to meeting the humanitarian and reconstruction needs of the Iraqi people, particularly through the agriculture sector.

Australian assistance to Afghanistan is delivered primarily through multilateral organisations and NGOs, with a priority placed on humanitarian, rehabilitation and capacity-building assistance, in a bid to aid the transition to peace and democracy.

Australia also provides assistance to the Palestinian territories and Palestinian refugees in surrounding Middle East countries, with a focus on humanitarian relief and building local capacity to support Palestinians. Australian assistance includes support for the provision of essential services, such as education and health, and support for community organisations and emergency relief, delivered primarily through multilateral organisations and NGOs.

Global programs

Emergency, humanitarian and refugee aid

Australia's emergency, humanitarian and refugee programs lessen the adverse impact of conflict and natural disasters on vulnerable populations, supporting the promotion of stability, peace and security.

Increased funding in 2004-05 for humanitarian, emergency and refugee programs will enhance the aid program's ability to respond quickly, flexibly and effectively to humanitarian needs resulting from disasters and conflict.

A stronger analysis of conflict and disaster vulnerability in the region will identify new peace building and disaster preparedness strategies and activities to better prepare communities at risk.

Australia will continue to provide significant core support to key humanitarian agencies such as the International Committee of the Red Cross, and will continue to work closely with effective delivery agencies such as the World Food Program and the United Nations Children's Fund. Funding for the International Refugee Fund will be maintained to address the needs of those displaced by conflict.

While largely targeting the Asia-Pacific region, Australia will continue to respond to emergencies beyond its immediate region, including further humanitarian relief and reconstruction assistance to Iraq, post-conflict support for Afghanistan and continued support for humanitarian needs in Africa, including Sudan.

Multilateral and international organizations

Australia provides direct support to multilateral and international organisations that are effective and efficient in pursuing their objectives and which complement Australia's development cooperation efforts. These organisations play an important role in the achievement of Australia’s aid objectives and as delivery mechanisms for a number of bilateral programs. In 2004-05 Australia completed replenishment negotiations for both the Asian Development Bank and the World Bank. Australia will continue to strengthen its engagement and partnerships with the multilateral development banks, focusing on development effectiveness and impact, and bank engagement with individual countries particularly in the Asia-Pacific region.

Australia’s development cooperation program supports global efforts to address key environmental concerns. It contributes to the Global Environment Facility, which funds projects in six focal areas of biodiversity, climate change, international waters, ozone, land degradation and persistent organic pollutants. The program also supports the Montreal Protocol Multilateral Fund to assist with global efforts to repair the ozone layer and the United Nations Environment Programme.

Australia’s aid program provides core funding to a number of UN development and humanitarian organisations, with a focus on those who have demonstrated efficiency and effectiveness in the delivery of aid, and those with relevance to Australia's bilateral programs, particularly the Asia-Pacific region.

In 2004-05 Australia will contribute core funding to twelve multilateral organisations, including: the World Food Program ($31m), United Nations Development Program ($7m) and UNICEF ($5.5m).

Non-government organisation (NGOs) and volunteer programs

Australian NGOs are recognised for their strong links with both Australian and partner country communities overseas. By working with effective NGOs, AusAID aims to achieve quality aid outcomes and to extend the reach of the aid program to the communities with which Australian NGOs work. During 2004 AusAID will continue to actively engage Australian NGOs on the advancement of development issues and quality outcomes through both the Committee for Development Cooperation and the Australian Council for International Development.

In 2004-05 AusAID is providing $21.6m for its various volunteer programs. AusAID continues to support young Australians on volunteer assignments in partner countries throughout the Asia and Pacific regions through the Australian Youth Ambassadors for Development Program (AYAD). The key aim of the program is to strengthen mutual understanding between Australia and the countries of Asia and the Pacific and thereby make a positive contribution to the development of our region. The AYAD Program is accessible to 18-30 year olds for volunteer assignments of up to 12 months. In September 2004 the 1,000th Youth Ambassador will be placed overseas.